Character-driven knowledge exchange: overcoming the problem of moral hazard in knowledge exchange

The exchange of knowledge between the Higher Education sector and industry is increasingly being seen as a vital component of economic growth by bodies such as the CBI and the UK Government (CBI, 2015; House of Commons Science and Technology Committee, 2013). However, such relationships present a series of challenges. These include challenges relating to the initiation of a knowledge exchange including the identification of appropriate academic expertise and the incentivisation of academics to engage in knowledge exchange (Jacobson, Butterill & Goering, 2004; CBI, 2015). They also include challenges related to the translation of academic research into commercial application such as the stickiness of knowledge (Arnett & Wittman, 2014; Blackman & Benson, 2012; House of Commons Science and Technology Committee, 2013). There is a further complexity of needing to clarify the exact nature of the knowledge exchange activity since it ranges from the traditional ‘blue sky’ research through development to innovation as perceived by the recipient of the ‘new’ knowledge (Rogers, 1962) and (Davis and Hobday, 2005). Finally, there are challenges related to managing the inter-personal relationships involved in knowledge exchange such as the need to build trust and social capital (Alexopoulos & Buckley, 2013; Dowling, 2015). One of the more overlooked challenges is that of ‘moral hazard’ – the counterintuitive phenomenon of increased risk sharing leading to a decrease in the incentives to avoid unnecessary risks (Baker, 1996). This developmental paper explores that challenge and points to Aristotle’s intellectual virtue of phronesis as a potential way to overcome such hazards.